UK wind farm plans on brink of failure October 24, 2008

A maintenance boat works next to the turbines of the new Burbo Bank off shore wind farm in the mouth of the River Mersey. Photograph: Christopher Furlong/Getty Images

Last week Britain committed itself to cutting greenhouse gases by 80 per cent. This week Gordon Brown will claim the UK is now a world leader in wind power. An Observer investigation reveals his hopes could be blown wildly off course. No country has tried to switch so fast to renewable energy – but rising costs and technical problems mean that, without urgent action and cash, the targets cannot be met. John Vidal reports

A major threat to Britain’s ambitions for renewable energy will emerge this week when wind industry leaders admit that targets set for 2020 are looking increasingly unrealistic.

They will use a high-profile conference in London to warn Gordon Brown that there is little chance of achieving the government’s goal – of wind generating one third of all UK electricity within 12 years – without a huge injection of public money.

It comes as an Observer investigation reveals that planning delays, long delivery times, escalating costs, 10-year hold-ups in connection to the national grid and technical problems in building offshore windfarms all threaten to derail Brown’s ambitions. The result could be electricity shortages by 2020, failure to meet climate change and energy targets and possible hefty fines from Europe.

The developments will come as a blow to the government. Last week Ed Miliband, the new minister for climate change, said Britain would increase its target for reducing greenhouse gas emissions by 2050 from 60 to 80 per cent.

Brown will tell delegates at the annual conference of the British Wind Energy Association (BWEA) this week that the UK industry is now a world leader. But others will claim that there is a severe shortage of engineers and companies are reviewing their commitments to wind energy because of spiralling costs. Britain is legally committed to generating 15 per cent of all energy from renewables by 2020. This means that wind power, which presently contributes about 4 per cent of UK electricity, must expand to generate 36 per cent within 12 years.

No country has tried to switch its electricity supply so quickly on this scale, and to achieve it the industry will need to build nearly 15,000 turbines, generating 35 gigawatts (GW) of electricity, on land and at sea. Many experts say it is technically feasible to meet the targets, but there is a growing conviction that the plans were rushed through so quickly by the government that it will now take substantial new money and guarantees to work.

It is a very different story elsewhere. This week, in a vast warehouse in Berlin, blades for the world’s largest wind turbine are being handcrafted by teams of people and robots. Each is 20 metres longer than the wing of the world’s largest aeroplane, and when perched on top of 140-metre concrete towers in Belgium next year their tips will soar nearly 250 metres above the ground – higher than any building in Britain.

Ten years ago most wind turbines in Europe could barely power 200 homes, but technological advances have been so great that this single seven megawatt (MW) machine, known as the Enercon E-126, should provide nearly 20 million kilowatt hours of electricity a year – enough to power a town the size of Penzance.

There are others even bigger being planned in the US, but independent analysts say there is little chance that one of these turbines will be installed in Britain for many years. Many are deeply sceptical, saying that the government should not have put so much faith in wind power without making it easier for the industry to operate.

‘The numbers do not add up,’ said energy analyst Professor Ian Fells of Newcastle University. ‘It is physically impossible for the industry to meet its target. The most that any country has ever built offshore is 350MW in a year. But they need to install nearly 10 times that in 12 years, and most will be far offshore. It means they will have to install hundreds a week. They cannot do it.’

Even Maria McCaffery, chief executive at the BWEA, has admitted for the first time that the industry might not reach the ambitious targets. ‘It’s tough, but just about achievable,’ she said. ‘But how close we can get to the target depends on what happens in the next few years. It’s not guaranteed, but it’s too soon to be defeatist.’

Paul Cowling, head of Npower Renewables, one of the two largest wind companies in Britain, with 4.5GW of wind power planned but not yet approved, said: ‘With the right commitments from government, it’s just about do-able. But we have never had targets like this before. Everything must be joined up and a lot can go wrong.’

A senior executive in a power company, who asked not to be named, added: ‘There is absolutely no room for manoeuvre. The old nuclear power stations will be out of service, the new ones will not be on stream and big renewable projects like the proposed Severn barrage have not even been agreed, let alone built. Wind is the main plank of the government’s energy policy over the next 12 years, but if anything at all goes wrong anywhere, then the targets will be missed and we are all in trouble.’

New studies warn of looming financial and supply problems. Last week the Carbon Trust, a government agency, warned that the steep rise in the price of building offshore farms could undermine the whole project. ‘Currently the risk/return balance for offshore wind is not sufficiently attractive, and regulatory barriers would delay delivery well beyond 2020,’ it said.

Tom Delay, the Trust’s chief executive, added: ‘Industry costs have become very, very expensive, and both government and companies need to work hard to tackle this. Without urgent action, there is a risk that little additional offshore wind power will be built by 2020.’

Cambridge Energy Research Associates says that Britain should expect a 20 per cent increase in offshore wind capital costs over the next few years on top of the 50 per cent increase in the past three years.

In August, energy consultancy Sinclair Knight Merz reported that most existing wind turbine manufacturers were booked solid for the next five years. ‘The cost of offshore projects has doubled in five years,’ it said.

That is not to mention the powerful opposition on the ground. Yesterday countryside protection groups warned that resistance to wind farms would be fierce and that planning delays, public inquiries and protests were inevitable. There are likely to be outcries in Cornwall, Wales, Yorkshire and Scotland when the scale of some of the farms is seen and it is understood that they will need hundreds of miles of 60-metre pylons to criss-cross some of Britain’s most beautiful landscape.

Dr Frank Mastiaux, chief executive of the climate and renewables division of German electricity supplier E.ON, which is now building a 180MW offshore farm at Robin Rigg in the Solway Firth, said the UK targets were ‘extremely challenging’. He added: ‘Future wind farms will need to have thousands of turbines, each so big it would be like a football field turning on top of a steel mountain.’

One major problem is planning laws, which have been holding up dozens of projects for years.

Stephen Tinsdale, head of communications at Npower renewables, said: ‘It can cost up to £200,000 just to put an application in, and you can expect it to take three to four years to go through planning. Two-thirds of all applications are refused. On top of that, there are conditions from the Ministry of Defence over radar and conditions by local authorities on when we can and cannot erect them. England has very few places left where you can build large farms. There are potential delays at almost every stage.’

New laws should make planning speedier for the industry, but the Infrastructure Planning Commission, which will handle applications for all large farms and should be set up next year, has not been tested yet either in practice or in the courts.

Another problem facing companies is getting connection to the National Grid. Some companies in Scotland have been told to join a 13-year queue and are being asked for deposits of millions of pounds before the grid will agree to connect them. Currently, 115 Scottish renewable schemes, totalling 9GW of mostly wind power, are waiting to plug into the grid before they can supply electricity. Some already have planning permission but have to wait many years to connect.

‘It is plausible to meet the target, but it is very deeply challenging,’ said a spokeswoman for National Grid. ‘We have signed agreements to connect 16GW of renewable generation throughout Great Britain, but over 75 per cent of this total is stuck in the planning system.

‘Urgent reform to the UK’s planning laws and energy regulation are needed. We’re fully aware that some dates are later than some people would like. We will try to work with developers to bring the dates forward wherever possible.’

But in an unpublished paper submitted to the government, National Grid says that, while it is possible to connect new offshore farms in time, the onshore target of 14GW of wind is ‘not credible’. ‘This is an area where we are not optimistic. We believe that only 12.9GW is credible,’ says the paper.

The real prize for governments looking for major increases in wind capacity is a series of giant 5-6GW farms with hundreds of the biggest turbines 10 to 20 miles offshore. The first are being planned to be built after 2014 in the Bristol Channel, the Wash and off Wales and Yorkshire. But wind companies are having increasing doubts about their financial viability. While they are technically feasible, they are already more than twice the cost of onshore farms and the price is spiralling upwards.

Signals that UK offshore farms may not be profitable came in June when Shell pulled out of the consortium planning to build Britain’s biggest offshore farm, the London Array in the Thames Estuary, in favour of developing more profitable wind projects elsewhere. Then last week the government of Abu Dhabi stepped in to help the project after Royal Dutch Shell withdrew.

Other developers are questioning whether they can justify the investment needed in Britain. Shell and BP are competing in the US to build the world’s largest wind farms. ‘Many are now recosting their plans and are attracted by other countries who are tempting them with tax breaks and a freedom to build what they want practically anywhere,’ said one analyst.

Npower’s Cowling said: ‘We are going to need different boats, a whole fleet of vessels, offshore cable installers, helicopters. We are already getting close to our hurdle rates. If things get worse, it makes it a marginal decision whether we invest in them or not. It’s all very risky. Because the UK is a difficult place to do business, the utility companies will just go elsewhere. We are not threatening to go, but if a utility finds a project which it can build quickly, it will go there. We are committed to the UK, but it is difficult.

‘Until you get absolute consent from government, people will dither and it will take longer to install farms. Industry costs have become very, very expensive, and both government and companies need to work hard to tackle this.’

Potentially more serious is growing competition from other countries both for turbines and other machinery, as well as engineers. The market for wind is very strong, with more than £40bn invested worldwide last year, demand for turbines going through the roof as countries rush to meet climate change targets, and the very few manufacturers producing turbines now looking only for large orders. Emerging Energy Research, a leading research and advisory firm analysing clean energy markets, expects the international wind power industry to increase 500 per cent over 12 years.

Vestas, the world’s biggest turbine maker, now has a £6bn order book and its turbine prices have risen 74 per cent in the past three years. China plans 100GW of wind power by 2020, a ten-fold increase from today. Texas alone plans more wind power than is expected to be installed in Britain in the next 20 years. The net result is that prices are escalating and orders for equipment taking longer and longer.

‘Everyone wants wind power. If you ordered today you could possibly get a turbine in 2011. But you would have to be a serious order,’ said an Enercon spokesman. ‘It is a very good time for wind.’

Targets

2008 Wind to generate 3GW of electricity – enough to
power several million homes

2010 Renewables to generate 10 per cent of all UK
electricity, of which wind is expected to constitute 60 per
cent. Wind to generate 36 per cent of UK electricity by 2020